The NPD Group sees a healthy growth in the purchase and use of Blu-ray Disc set top boxes and Blu-ray video content in the U.S.

Based on information from NPD's latest update to the "Entertainment Trends in America" report, 15 percent of U.S. consumers reported using a Blu-ray player in the prior six months in March 2011, up from 9 percent the prior year. By way of comparison, 57 percent of U.S. consumers reported using a standard DVD player in 2010, which is unchanged from 2009. According to NPD's report, 49 percent of PS3 owners are viewing Blu-ray movies on their game consoles at least once a month, which is also adding to the base of physical-disc users. Year-over-year sales of set-top Blu-ray player units increased 16 percent.

There is evidence that Blu-ray is beginning to offset the loss of DVD customers. NPD estimates there are currently 116 million physical disc buyers in the US, which is down from 128 million in 2009; however, the nearly 26 million Blu-ray buyers helped keep that number from sliding further. Blu-ray buyers are also beginning to buy more discs than they did in 2009 or 2010, including both new releases and older catalog content.

"Because fewer hot titles came out of the theatres in time for first quarter release, the physical video-disc market was a bit disappointing -- especially coming off of a good first quarter last year; but consumer response to the Blu-ray format remains strongly positive, said Russ Crupnick, entertainment industry analyst for NPD. "While Blu-ray may not be the replacement for DVD that many once hoped for, it is certainly adding strength to the physical video-disc market. This added stability is helping to extend the life of discs, even as digital options gain in popularity."

Consumer feedback from NPD's video research points to recognition of Blu-ray's technology advantages, increasing value proposition, and benefits from packaging (e.g., combo packs that offer a DVD, Blu-ray and Digital Copy). Eight out of 10 current and prospective owners of Blu-ray set top boxes cite high definition quality and technology as the reason they purchased, or intend to purchase, a Blu-ray player.

Consumers are also noticing the better pricing and value of Blu-ray, as prices of hardware have declined. Word of mouth is helping grow the Blu-ray customer base, as well. Thirty-six percent of consumers who intend to buy a player were influenced by the product recommendations of friends and family members.

"It wasn't too long ago that most consumers felt DVD was 'good enough,' and while it's true DVD is a terrific format, more consumers are now recognizing that Blu-ray does indeed deliver a superior experience," said Crupnick. "Certainly the fact that prices are now within the budgetary range acceptable to rank-and-file consumers is helping bolster the overall value proposition of the Blu-ray format."

In addition to the positive feedback on Blu-ray discs, NPD notes that digital services have also driven increased interest in Blu-ray players. In fact 50 percent of consumers who intend to buy Blu-ray set-top players in the next six months cited the desire to use available subscription video download services as a primary reason."

"As more and more buyers make the decision to obtain the superior picture and sound technology of Blu-ray, there is also more awareness that the same player that delivers that experience can also provide access to digital services that are gaining the attention of American consumers," Crupnick said.